THE BIG 4 !

By Natasha Khaleeq

The Music Industry. • The music industry sells compostions, recordings and perfomances of music. The are

lots of different aspects to an industry that is this big. Such as the musicans themselves, the companies and proffsionals that creat, promote and sell the recored music for example music publishers, producers, studios, engineers, record labels, retail, performance rights organisation and online music stores. Others involved in the industry present live music performance (booking agents, promoters, music venues, road crew, tour directors); Those who broadcast music (satellite and broadcast radio); educators; journalists; people who make instuments, etc…

• In the 19th century and early 20th century, the music industry was dominated by people who made sheet music. By mid-century records had supplanted sheet music as the largest money making proffesion in the music buisness. Since 2000, sales of recorded music have dropped off substantially, while live music has become very important, there are 4 major labels that dominate recorded music, they are Sony Music Entertainment, Universal Music Group, Warner Music Group and EMI, each of them has synergy in the form of smaller companies and labels that serve different regions and markets. The live music industry in dominated by Live Nation, the largest promoter and music venue owner. It is the biggest promoter and music venue owner, Live Nation is also a former subsidary of Clear Channel Communications, which is the largest owner of USA radio stations. Other important music industry companies include Creatice Artist Agency (a management and booking company) and Apple Inc. (which runs the world’s largest music store, I Tunes store and sells iPods.)

History… • The music involves processes such as production, distribution and sale of music in lots of different

forms as well as the promotion of concerts. The public have brought, sold and haggled music since it has been invented. Travelling music teachers, broadside sellers, street singers and roving minstrels helped to make small and simple ‘grassroots’ music industries. That are different in size then in type when compared to modern music businesses.

• In mid-nineteenth century, sheet music was the top selling product, as there were a lot of people who own piano’s. The product was advertised nationally, and sales were boosted by the inclusion of songs in touring musical reviews. Blackface minstrelsy, the most popular form of live entertainment in the nineteenth century in the USA, provided one of the main promotional devices to attract audiences. The large minstrel companies became famous by touring through national theatre circuits. Their authorization of a song resulted in lots of sales throughout America.

• 1880’s saw publishing firms gathered around Manhattan’s 28th street ‘Tin Pan Alley’ according to newspaper and songwriter Monroe H. Rosenfeld. The publishers in the city perfected the mass production and distribution of songs. Paying staff or freelance composers a general amount of money per song, firms in Tin Pan Alley made loads of different music pieces in hope that a few would get to the American public, and the publishers paid popular vaudeville singers a lot of money, so that they would include a song in their act.

• In 1877 Thomas Edison invented the phonograph which was initially used just for music, however in 1890’s ‘nickel-in-the-slot’ talking machines were put into down-town arcades, this introduced the nation to mechanically reproduced music. A few companies controlled the copyrights to competing phonograph technologies, for example Edison controlled wax cylinder playback technology, he then licensed to Columbia Phonograph Company and together in 1896 they made the first home used talking machines. Edison’s competing company who was Emile Berliner and he designed gramophone disk machines and records had them already grandly distributed by 1901, Eldridge Johnson from Camden NJ made the Victor Talking Machine company to advertise the disk machines.

…History… • These firms quickly set up their technology as the consumer standard throughout the USA and

the world. However Victor eventually won the technology battle as he focused on the home consumer trade, by creating celebrity recording artists such as opera singer Enrico Caruso and by expanding internationally.

• In 1901 Victor and licensee Gramophone divided the globe into obvious markets and set up distribution networks, retail outlets and recording operations from China to Latin America. Other companies copied this idea.

• In 1917, initial copyright restrictions were coming to an end, this resulted in the creation of a number of small firms that provided music to previously established consumers. African Americans and southern white native artists introduced blues, jazz, country and folk music to the industry.

• 1919- radio corporation of America (RCA) was created and began to advertise consumer- friendly radios. By the 1920’s America had over a million sets. However concerns with copyright holders were raised to do with the radio because broadcasters started to sell airtime. Although phonograph companies realized the advertising potential of the new invention so in1929 RCA joined together with Victor and the phonograph, and other connections. Although recording artists demanded compensation for the broadcast of material through the American Society of Composer, Authors and Publishers. (ASCAP)

• The Great Depression destroyed the industry as sales decreased dramatically from 150 million sales in 1929 to 10 million sales in 1933. This caused businesses to fail and the industry to be reduced to a few powerhouse corporations. ASCAP continued to demand money from radio broadcasts and 1940 completely forbade radio stations to play the music they represented. However ASCAP rivals Broadcast Music, Inc. (BMI) offered stations its collection of music that had not been accepted by ASCAP, such as music by African American composers and artists, working-class styles and upcoming artists. This change brought about redistribution within the industry as previously scorned artists, styles and companies gained the opportunity to record in studios and be on radios. The change made African American styles the guiding force behind the industry’s post-war expansion.

…History… • Throughout the century musicians protected their careers and promoted themselves. Musicians

unions refused and failed to bring most recording artists to their ranks but still collected rights for their members, such as closed shops and union pay scales in established theatre circuits, society dance networks, recording studios and symphony orchestras. They were less successful in countering the loss of jobs to new technologies and garnering higher royalty rates for record sales.

• The post-war decade witnessed 3 developments that again transformed the music industry: tape recording, the long playing (LP) record and the rise of rock and roll. Long pieces of music were able to be recorded by the use of magnetic tapes, and the LP allowed their playback. The 45-rpm single was introduced and the growing jukebox trade, the LP heightened sales of new consumer technology, and it would again when the stereo was invented in the 1950’s. Hundreds of independent labels infiltrated the industry during the era, lots of them were promoting regional styles ignored by the major record labels. They were embraced by smaller radio stations, disks from small creations such as Chess Records and Sun Records introduced blues to young audiences throughout America, contributing to the rise of rock and roll and the re-adjustment of how the industry was advertised itself toward youth culture.

• In the late 1960’s the LP dominated industry profits, major record labels soon perfected promotional methods that combined albums that were advertised well, world tours and airplay on “album orientated rock” stations. Industry profits increasingly derived form a smaller number of high-selling artists.

• In 1981 MTV added the music video as a powerful marking tool, for the industry and its artists. • In 70’s, 80’s and 90’s the music industry was characterized by corporate mergers, in 1994, 90%

of worldwide gross music sales happened to six multinational corporations (now known as the big 4). The 20th century ended as it had begun, even though the industry giants grappled with the copyright repercussions of the digital revolution.

History of the Big 4. • In the 1700’s and 1800’s the process of compostion and printing of music was

backed by aristocacies and churches. However in the mid-to-late 1700’s performers and composers such as Mozart began to seek commercial oppertuninties to market their music and performances to the general public, after his death his wife contiued this process by the use of comercial concerts, selling his manuscripts and collaboriating with her new husband on a biography of Mozart. In the 1800’s the music industry was dominated by sheet music publishers, in the USA, the music industry arose in tandem with the introduction of blackface minstrelsy. The group of music publishers and songwriters which dominated popular music in the USA was known as Tin Pan Alley.

• In the 1900’s the phonograph industry grew greatly in importance, and the record industry replaced sheet music publishers as th biggest money making proffesion in the instustry.

• A multitude of record labels came and went, however some label corporations prospered for decades. By the end of the 1980’s the “Big 6” EMI, Sony, BMG, PolyGram, WEA and Universal Music Group dominated the industry. In mid-1998 PolyGram merged with Universal Music Group, therefore the “Big 6” became the “Big 5”, and then became the “Big 4” when Sony merged with BMG.

History of the Big 4. • In 2000s consumers spent far less money on recorded music than they had In 1990s in all formats. The total

profit of CDs, vinyl, cassettes and digital downloads in the U.S dropped from $14.6 billion in 1999 to $10.4 billion in 2008. the download trend in expected to contunue in the future, Forrester Research predicts that by 2013, profits will be as low as $9 billion. This dramatic decline has caused large scale layoffs inside the industry, driven music retailers out of buisness (such as Tower Records) and forced record companies, record producers, studios, recording engineers and musicians to seek new buisness models.

• In the early part of this decade the record industry took action against illegal file sharing, and successfully shut down Napster in 2001 (the leading online source of digital music) and threatening thousands of individual with legal action. However this failed to slow the decline in revenue and was a public relations disaster. Some acadmeics studies have even suggested that downloads weren’t the cause of the low profit. Now legal digital downloads are avalible in the iTunes Store which started in 2003. The popularity of internet music distribution has increased and by 2007 more units were sold over the internet that in any other form, altough the profit made from this did not overcome the profit lost by the industry.

• The turmoil in the industry has changed the balance between artitst, record companies, retail music stores, promoters and consumers. The leading music retailers in America are Wal-Mart and Best Buy. Recording artists relly on live performance and merchandise sales for the majority of their income, and this has made them more dependent on music promotors such as Live Nation (a company that dominates tour promotion and owns lots of venues. Such as promoting the Jonas Brothers World Tour at Wembely Arena).

• In order for record companies to gain money through bands, they have to rely on the “360 deal” or simple manufacturing and distibution deals, which gives a higher percentage of money to the artist but doesn’t cover the expense of marketing and promotion.

• A lot of upcoming artisit don’t see a “record deal” as part of their buisness plan, as It is possible to make your own high quality music using cheap hardware and software and distribute it over the internet to a worldwide audience.

• But doing this has caused many problems for recording studios, record producers and audio engineers. The LA Times reports that have of the recording facilities in the city have failed because aritisits are recording their own music. Changes in the industry have also given audiences a more diverse range of music at a cheaper price. Although the buying of music related technology, has improved in the last decade meaning more of an income for companies that sell that technology.

Major vs. independent

• Record labels can be small, localised and independent, or they could be part of a large international media group/somewhere in between.

• Major Labels are the Big 4 .• And a sublabel is a label that is part of, but has a

different name to a larger record company.

Business structure • The music industry has lots of different jobs for individuals, companies,

unions, not-for-profit associations, right collectives and others various job titles. Professional musicians, including band leaders, rhythm section members, musical ensembles, vocalists, conductors, composers and sound engineers create sound recordings of music or perform live various venues.

• Professional musicians sometimes negotiate their wages, contractual conditions and other conditions of work through Musicians’ Unions or other guilds. Composers and songwriters write music and lyrics to songs and other music creations. They get part of their income from writers’ copyright collectives and performance rights organisations such as ASCAP and BMI (or PRS and MCPS in UK). They are compensated when their works are used on the radio or TV or in films, when the musicians make CDs or DVDs, the creative process is often coordinated by a record producer. Their role in the recording process ranges form suggesting songs and back-up musicians, to having a direct hands-on role in the studio, coaching singers and giving them advice about different genres of music, they also work with song engineers to shape the recorded sound through effects and mixing.

Statistics

US Market Sales. World Wide Market Sales.

Universal Music Group

• Started in 1995 and was founded by Doug Morris and Daniel Glass, it’s main head quarters is currently in New York.

• It is the worlds leading music company (representing about 80% of the industry’s market) and is made up of to core business record music and music publishing. The company discovers, develops, markets and distributes recorded music thorough its subsidiaries, joint ventures and licensees in 77 different countries. It also sells and distributes music videos, mobile phones and DVD products , and licenses recordings discouraging piracy.

• The Universal Music Group also has a Universal Music Latin Entertainment company which is the worlds biggest one. Where as Universal Music Group International manages UMG’s businesses in all countries outside of the USA.

• Its publishing company, Universal Music Publishing Group, is the world’s leading publishing business, it owns and obtains rights to musical compositions and licenses them for use in the recordings and other uses, for example films and adverts.

• Universal Music Group also has a Bravado (its merchandising company).

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Universal Music Group• Universal has various sub-labels which include A&M/Octone,

Barclay, Decca, Deutsche Grammophon, Disa, ECM, Emarcy, Fonovisa, Interscope Geffen A&M Records, Island Def Jam Music Group, Machete Music, Mercury Records, Polydor Records, Universal Motown Republic Group, Universal Music Latino, Universal Music Group Nashville (which includes Lost Highway, MCA Nashville and Mercury Nashville), Universal Records South, and Verve Music Group.  

• UMG has lots of different artists which belong in various different genres, making Universal the leader in both international and local repertoire. Some of the artists signed to Universal are; The Black Eyed Peas, U2 and various others and though an arrangement with Hollywood records they also distribute the Jonas Brothers, Demi Lovato and Mylie Cyrus, and through an arrangement with Big Machine they distribute Taylor Swift.

(Jonas Brothers) (U2)

Warner Music • Although the company was founded in 1958 as a part of Warner Bros.

movie studio. The companies brought Reprise Records (founded by Frank Sinatra) which enabled them to have a more creative contorl when it came to his recordings, and was eventually brought by Edgar Bronfman Jr. for $2.6 billion, in 2004.

• WMG was the first media company to form a cooporation with YouTube, and embraced user-generated content, WMG recived money from YouTube according to how many times that videos with WMG artitst would be watched. However in 2008 this buisness plan broke down and as a result videos with WMG music have their audio removed.

• Waner Bros. Publications (the companies printed music operation); makes profit from using their own orchestras in Broadway musicals controlling 90% of productions untill the start of the War. In 2005 this part of the company was sold to Alfred Publishing. WMG labels include the following and some are sublabels of WMG sublabels.

• Atlanic Records Group: 1st & 15th Entertainment, 143 Records, Atlanic Records, Bad Boy Records, Elektra Records, Fort Knocks Entertainment, Lava Records, Roadrunner Records, Colonies Records, Grand Hustle Records.

Warner Music

• Warner Bors. Records: Black Smith records, Maverick, Nonesuch Records, Reprise Records, Festival Mushroom Records, Festival Mushroom Records, RuffNation Records and Sire Records.

• Rhino Entertainment: Atco records, Rhino home video, WMG soundtracks, WMG Film, Television and Commercial Licensing.

• Reyko Corporatio: Rykodisc records and Cordless Recordings. WMG also supports lots of idependent recording labels such as Broken English and Fearless Records.

• Artisits managed by WMG include; Green Day, Madonna, Alanis Morrisette, My Chemical Romance and Rob Thomas.

(Madonna) (Green Day)

EMI• EMI are one of the worlds leading companies and is privately owned by Terra Firma

since 2007, which makes EMI the only privately-owned major music company. • EMI publishing is the business of acquiring, protecting, administering and exploiting the

rights in musical compositions. This part of EMI enables music that is created by its artists is used commercially and ensures that proper pay is received for that use. EMI Music Publishing is the world’s most creative music publisher with one of the best creative music publisher with one of the best collections of musical compositions and songwriters assembled. Songwriters that work for EMI are people like Alicia Keys and Jay-Z.

• EMI was one of the first to complete and album cover over the internet, and release a digital album download, It was also the first company to make its music available without digital rights management software.

• EMI Music brings fans and artists closer together by driving action and creating value wherever music is experienced. To do this most effectively it is divided into 3 business divisions: New Music, Catalogue and Music Services.

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EMI• New Music; finds and develops new and exciting and successful music. Its

record labels include Angel, Blue Note, Capitol, Capitol Nashville, EMI Classics, EMI CMG, EMI Records and others. Artists on EMI include Lilly Allen, Pink Floyd, Beastie Boys, Cold Play, Katy Perry, 30 seconds to Mars and international artists such as Tiziano Ferro (Italy), Flex (Mexico) and Camille (France).

• Catalogue: maximises the value of EMI’s classic music assets, such as albums by David Bowie and The Beatles. This division of EMI also owns and runs the world-renowned recording studio Abbey Road in London and Capitol Studios in LA.

• Music Services’ mission is to Provide EMI’s diverse amount of artists as well as Independent labels and artists, with a world wide platform of commercial services, access to an expanding range of revenue streams and business models. It gives artists different revenues, markets them in both traditional and non-traditional commercial partners. Music Services is unique, focused and delivers solid execution to the way it licenses, synch and distributes, EMI’s artists.

(Katy Perry) (Pink Floyd)

Sony BMG • Sony Music Entertainment UK has broad range of local artists and

international superstars, as well as a lots of classical and important recordings throughout history. It is also owned by Sony Corporation of America.

• They organised their main music companies (RCA and Columbia Label Groups) in 2006, and in 2007 they got another frontline label; Epic. However Sony BMG also has a range of other labels including Jive, Zomba, J Records, 1965 Recordings, Syc Entertainment and Phonogenic.

• Sony BMG has a range of artists which inculde, Leona Lewis, Justin Timberlake, Christina Aguilera, Kings of Leon, Beyonce, The Scipt and Bob Dylan.

(Beyonce) ( Bob Dylan)

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